Afternoon summary
- The chancellor, Philip Hammond, has sought to reassure business about the potential economic shock of Brexit, unveiling a new guarantee over EU funding and promising the referendum result should not result in people becoming poorer or less secure. As Peter Walker reports, speaking to the Conservative party conference in Birmingham, Hammond also talked of what he called a pragmatic approach to austerity, reiterating that he would not seek a budget surplus by the end of this parliament in 2020. Here is my colleague Phillip Inman’s analysis of the speech.
That’s all from me for today.
Thanks for the comments.
Nick Gibb, the schools minister who outlasted his bosses Michael Gove and Nicky Morgan at the DfE, gave a careful defence of expanding grammar schools. He told a Policy Exchange panel that it would not mean “a return to the 1950s” with one in four pupils attending selective schools - suggesting the government has more modest aims in terms of the number of new selective schools.
But Rebecca Allen, director of the Education Datalab research unit, argued that selection at the age of 11 was a poor means of promoting social mobility. “We don’t need a sorting hat at 11,” Allen said.
There were few signs of enthusiasm for grammar schools among conference delegates who attended the panel, or at similar events in Birmingham so far. Perhaps the issue is less of a winner among party faithful than many people assume?
Andrew Tyrie, the Conservative MP and chair of the Commons Treasury committee, has welcomed Philip Hammond’s decision to ditch George Osborne’s fiscal rule. He said the government should replace with a longer-term deficit reduction target.
The chancellor has sent the right message in his speech today by ditching the fiscal rule to maintain stability. We’ve seen numerous rules, targets and guidelines which have been too short term and therefore not worth a great deal.
A longer term rule is essential to achieve economic credibility and to signal to the markets that there is a plan.
Liam Fox's speech - Summary
The final speech in the conference hall was from Liam Fox, the international trade secretary. Much of what he said was similar to what he said in a speech last week, making the case for free trade, but there were some new arguments in it. Here are the key points.
- Fox said globalisation offered great opportunities to the UK.
The phenomenon that we have come to know since the mid-1990s as globalisation represents an acceleration of the trend in which the world is increasingly compressed economically, culturally and politically.
It brings with it an increasing interdependence that means we cannot insulate ourselves from instability in far-flung parts of the global economy.
But it has also brought the chance to share prosperity, liberty and empowerment with millions of our fellow human beings across the world who had only ever known poverty, hopelessness and oppression.
The ability to trade every minute and everywhere means that we have the opportunity to increase our links with those trading partners and markets who are functionally like us but not necessarily geographically close to us.
Technological advances are dissolving away the barriers of time and distance.
I have often said that if Francis Fukuyama had called his book “the end of geography” rather than “the end of history” then he would have been more accurate about the world in which we now find ourselves.
I think the term globalisation could almost have been written with Britain in mind. It is an era where we have a tremendous opportunity to help shape the world around us for the benefit of all.
- He said the government should help those at risk of losing out from globalisation by focusing on improving people’s skills.
- He said “isolationism and protectionism never end well”.
- He confirmed that Britain could not negotiate trade deals while it remained a member of the EU.
While we remain inside the European Union we are bound by its rules not to negotiate any new trade agreements, although we are able to discuss the impediments that we might wish to eliminate ahead of agreements we might reach with other countries when we leave.
It is worth pointing out that this is quite different from what David Davis said in a ConservativeHome article in July about the Brexit strategy. Writing shortly before he became Brexit secretary Davis said:
So be under no doubt: we can do deals with our trading partners, and we can do them quickly. I would expect the new prime minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.
So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.
- He said no one should doubt Theresa May’s commitment to Brexit.
The prime minister has said clearly that Brexit means Brexit – and for those who believe it can be indefinitely postponed or that there might be a second referendum or that we might stay by some back door mechanism, let me tell you, Theresa May is not someone who is known for saying anything, other than what she absolutely means.
- He said he would conduct a joint trip to Africa in the new year with Priti Patel, the international development secretary. That was because trade and development had to go together, he said.
A continued focus on good governance, mediated and encouraged by international aid and assistance programs, combined with increasing attempts to see a more open and liberal trading environment, are our best hope to see grotesque levels of poverty consigned to history.
Updated
If Andrea Leadsom had not dropped out when she made the final two of the Conservative leadership contest, and if Theresa May’s campaign had crashed, Leadsom would have been today getting ready for her first conference speech as prime minister.
As it was, she ended up as environment secretary. In her speech she focused on arguing that “the Conservatives have always been the party of the environment” and that Brexit would offer great trade opportunties.
She included just one, self-deprecating reference to the leadership contest.
I don’t know about you, but it seemed to me [Labour’s] leadership election dragged on far too long.
If only they’d come to me for advice on how to keep it short.
She also included this odd claim.
I hear that tourists are even buying bottled English countryside air for up to £80 a go.
That was a reference to this story in the Daily Mail, which looks a bit like a spoof but which seems to be true.
My colleague Marina Hyde is alarmed.
Andrea Leadsom has literally just claimed tourists are buying bottles of English country air for £80. #marmalade #air #weseemquitefucked
— Marina Hyde (@MarinaHyde) October 3, 2016
French and German elections could help UK in Brexit talks, says Redwood
John Redwood, the Conservative former cabinet minister and leading Eurosceptic, told a fringe meeting that next year’s elections in France and Germany could help the UK negotiate a good Brexit deal.
I think the European elections are a cracking food reason to get on with Brexit, because it seems to me that if Hollande and Merkel have got to face the electors, they are not going to want to make one of their key planks putting on penal tariffs against their exporters into Britain.
And if they did think that was a good wheeze they would soon have their equivalent of the CBI and the TUC saying ‘we cannot afford to have any tariffs on French cheeses or French wines or German cars into Britain’, because we have an awful lot of jobs here and some of them will be in marginal constituencies.
So I say that’s a very good thing. People are the only way of keeping governments honest and sensible, so we need to trust the people.
Normally people argue the opposite; that the French and German governments will be less willing to offer concessions to the UK, not more willing, when they are facing re-election.
In her speech Karen Bradley, the culture secretary, said that, although she was an accountant, that did not mean she did not appreciate culture.
As a chartered accountant, I couldn’t help starting this speech with numbers - even though some commentators have said that being one means I must have no interest in the arts.
Well, I’m really proud I did a maths degree - and I enjoyed working as an accountant.
But if you think what I wanted to do after a day of looking at spreadsheets was read more spreadsheets…
…then your grip on reality is as weak as Jeremy Corbyn’s.
Accountants are – shock horror – people too. And so we tend to like TV, music, film, art, and sport just as much as other people.
I love sport and I’ve been a Manchester City fan all my life – whatever division they were in.
I’m a regular at the New Vic theatre in Newcastle-under-Lyme.
And I have paintings by Moorlands artists such as David Hunt on my wall at home.
She also said culture made a vital contribution to the economy.
Tourism is worth more than £60 billion. Creative industries contribute more than £87 billion. The fashion industry alone is worth £26 billion.
To give you some context, our revitalised – and very important – automotive industry is worth around £19 billion.
Altogether, DCMS [department for culure, media and sport] sectors account for more than 13 per cent of ALL of our goods and services.
Karen Bradley, the culture secretary, has just finished her speech to the conference. The Telegraph’s Michael Deacon was not impressed.
You all said no speech could possibly be more boring than Philip Hammond's. Well, Karen Bradley is now making you all look pretty silly
— Michael Deacon (@MichaelPDeacon) October 3, 2016
I will post a summary of the highlights (such as they are) shortly.
Andrea Leadsom, the environment secretary and surprise runner up in the Tory leadership contest, is speaking now.
Davidson says Scottish Tories won't adopt May's grammar school plans
Ruth Davidson, the Scottish Conservative leader, has said that Nicola Sturgeon, Scotland’s first minister, should focus on helping Scotland cope with Brexit rather than trying to “wish away” the referendum result.
Speaking to reporters, she said:
There was an acknowledgement that the UK was the member state, the decision was a UK-wide decision. [Sturgeon] absolutely bought into that by going down south in order to argue to an audience in other parts of the UK that it was a UK-wide decision.
She, like me, was on the different side of the argument to the side that won. She, like me, is disappointed with the result. But she can’t wish away the idea that this is going to happen, because it is going to happen.
Instead of using this as a constitutional chisel, there is work that needs to be done to make sure that we get a better deal out of this for Scotland than we otherwise might do.
Davidson also said the Tories would not be advocating extending grammar schools in Scotland. She said:
It’s not something that I have ever suggested, it’s never been in any manifesto in Britain and it won’t be in any manifesto that I write for Scotland as long as I am leader of the Scottish Conservative party.
Extending grammars could undermine progress made in improving schools, says Nicky Morgan
The government’s plan for new grammar schools risks being a distraction to education reforms and could undermine wider progress in improving schools, the former education secretary, Nicky Morgan, the former education secretary, told a fringe meeting.
Speaking at a fringe meeting about inequality in schools, Morgan, who was removed from the job by Theresa May in July, warned that a government department “only has so much bandwidth in terms of delivering of reform”, and that grammars were an unnecessary diversion. She said:
For me, I do worry that a return to more selection risks undermining the progress that we have seen over the course of the last decade in our schools, by throwing something else into the education debate, rather than focusing on every school offering an excellent education.
Here is Susan Kramer, the Lib Dem economic spokesman, on Philip Hammond’s speech.
Philip Hammond’s speech failed to address one simple fact: he has already lost the most important battle of his time as chancellor. The Hard Brexit plan set out by his boss will damage our economy, kill jobs and blow a hole in our finances. Hammond knows it, he even hinted at it, but he won’t come out and be honest about it with the British people.
After the Brexit announcement yesterday, today the pound had hit a new three year low. Recycled spending on housing, some commons sense of deficit reduction and rubbish jokes about Ed Balls won’t cut it. We need real, radical action to turn the ship around, and this speech shows that Philip Hammond is incapable of delivering it.
Tories should stop being 'complacent' about Corbyn and understand his popularity, says Halfon
The Conservatives should not be “complacent” about Jeremy Corbyn, a senior Tory told a fringe meeting. As PoliticsHome reports, Robert Halfon, the former Conservative deputy chairman who is now skills minister, said that the Tories needed to work out why Corbyn was so inspirational to people. He told the meeting:
When Jeremy Corbyn got re-elected there were too many Conservatives celebrating on Twitter and implying that it’s a walk in the park, that we can all go to the Bahamas for the next five years, that the 2020 election is already won.
Now, the reason why that is wrong is actually we’re not looking at the much deeper meanings of how he won ... Not every one of the 600,000 members who have joined the Labour party is a hard-left Trotskyite ... There are also many hundreds of thousands of people, I suspect, who have joined the Labour party, who support the Labour party, because they believe they have a noble mission which is helping working people and helping people on lower incomes.
When we think “oh whoop dee doo, Jeremy Corbyn’s got re-elected” we should actually be thinking why are so many young people joining the Labour party? Why do they still have a powerful message on the doorstep despite the fact that many Conservatives believe they get it wrong? So the first task of the Conservative party is we have to be a party with an ethical, moral mission too.
We must not be complacent about the Labour party for one minute.
SNP says Hammond's speech was 'incredibly complacent' given Brexit concerns
Stewart Hosie, the SNP’s Treasury spokesman, has accused Philip Hammond of being “incredibly complacent” in his speech this morning. Hosie said:
After the chancellor’s summer of silence on Brexit this was an incredibly complacent speech.
Alongside the Tories damaging austerity plans they are now planning on taking the UK out of the single market, putting jobs, investment and trade at risk. The chancellor is set to preside over an act of economic vandalism that is simply reckless.
Philip Hammond at least acknowledged there was great uncertainty because of his government’s disastrous Brexit vote, but the chancellor had no answers. No answers on tariffs; no answers on access to the single market; no answers on anything.
The chancellor admitted his own government’s failure to turn around the UK’s poor productivity levels but there was no mention of the Conservative government’s failure to stimulate it.
George Freeman, the Tory MP who chairs Theresa May’s policy board, implied on the World at One that Jeremy Corbyn was taking Labour to the “lunatic fringe”. The Conservatives wanted to take the “centre ground” of UK politics, he told the programme:
If Jeremy Corbyn is taking the Labour party of to the lunatic fringe of politics we will take that centre ground and Theresa has signalled very loud and clear there are no no-go areas for 21 century Conservatives. If the Labour party won’t speak for those people we will. And we want to look at the hard policies that can tackle what we heard in that Brexit vote. Yes, a clear message on Europe, but it was a roar as well about a model of growth that isn’t working for people in the right way.
Rudd says government not planning to increase immigration from Commonwealth
Amber Rudd, the home secretary, speaking at a Times/Redbox fringe gave little away about her department’s progress on what a post-Brexit immigration system is going to look like. She did however stress that it was the freedom of movement of EU labour rather than of tourists or visitors that she was interested in restricting.
She said that the important thing was to restrict the freedom of movement but “we must make sure that we do not disadvantage the economy as we do it. There are areas where we can reduce immigration without damaging the economy.”
Rudd confirmed that the 2015 Conservative manifesto commitment to reduce net migration to the tens of thousands still stands.
The only hint she gave of future immigration policy came when she was asked about Vote Leave campaign promises that curbs on EU migration could lead to increases in migration from Australia, India and other parts of the Commonwealth. She made quite clear that increasing Commonwealth immigration was not being considered: “There are no plans to increase immigration from Australia. Did somebody promise to increase migration from Australia? Who was that?” she asked.
“Oh Mr Johnson again,” she said when she was told it was the foreign secretary.
Home Sec @AmberRudd_MP outlines her priority is protecting the vulnerable, esp women @timesredbox fringe #cpc16 pic.twitter.com/FUsJyyA5SO
— Kate Shoesmith (@ShoesmithKate) October 3, 2016
Updated
CBI and IoD back decision to delay deficit reduction
Here is some business reaction to Philip Hammond’s speech.
Generally, business seems happy with the decision to delay deficit reduction, but wants more detail from Hammond about his investment plans.
From Carolyn Fairbairn, the CBI director general
With the clock now ticking on an EU exit, it’s good to see the government set out the right chapter headings on how to boost confidence in our economy. We must now hear more on how government will work with business to build an inclusive, long-term industrial strategy. The autumn statement must move us several steps on to drive future investment and innovation across the country.
The government is right to adopt a more flexible approach to fiscal policy at this point, but it remains essential that public finances are sustainable over the economic cycle.
From James Sproule, chief economist at the Institute of Directors
The chancellor hit the right notes today, talking of boosting house-building, investing in technology and innovation and the importance of getting value for money from infrastructure. But soon, businesses will need to see this positive mood music turn into something more concrete. Philip Hammond has between now and the autumn statement in November to develop an economic plan that boosts confidence and sees business through the uncertainty of the Brexit negotiations ...
Business is prepared to give the government some leeway on the deficit. After the referendum, most IoD members agreed with pushing back the target to run a budget surplus by the end of the parliament.
From Adam Marshall, director general of the British Chambers of Commerce
As the UK negotiates its exit from the European Union, Philip Hammond is right to reaffirm the need to boost infrastructure, business investment, and to raise productivity, while being mindful of reducing the deficit. However, there were no substantive details on these, and UK businesses will eagerly await further details in the autumn statement.
Updated
John McDonnell accuses Hammond of adopting Labour's economic policy
John McDonnell, the shadow chancellor, has accused Philip Hammond of lifting Labour’s economic policy. In a statement he said:
This morning, Philip Hammond may have performed a U-turn on investment spending, admitting that the failed ‘long-term economic plan’ never really existed, and he still intends to go ahead with cuts to in-work benefits and local authority funding.
Labour is now the only national party with a fiscal framework that supports patient, long-term investment in our economy, and it’s clear that Phillip Hammond is now borrowing from Labour to invest in his own speech. As well as abandoning their own fiscal charter, this was full of the same empty promises George Osborne made, only with worse gags.
The chancellor should apologise today for the failed Tory approach that has meant he has had to abandon the failed economic agenda of the last six years, an approach which has seen them dragging their heels on tax avoidance, an increase in child poverty and housebuilding falling to its lowest peacetime rate since the 1920s. The dangerous divide in society the chancellor mentioned has come about as a direct result of the policies he has voted for since 2010.
Updated
The TaxPayers’ Alliance has criticised Philip Hammond’s speech. This is from its chief executive, John O’Connell.
It is heartening to hear the chancellor reiterate the need for the country to live within its means, but abandoning the plan to reach a budget surplus by the end of the parliament bodes ill.
Moving away from balancing the books as a matter of priority means burdening future generations’ taxpayers to pay for today’s overspending, which is immoral.
Updated
Philip Hammond visited a construction site in Birmingham before his speech today with Theresa May.
Under the George Osborne regime, it would have been the chancellor in the hi-vis jacket. But Hammond has a different approach to photo opportunities.
Updated
Here is some comment from journalists on Philip Hammond’s speech.
From the Sun’s Tom Newton Dunn
Hammond speech summary: Hard Brexit over my dead body, meet the champion of Soft Brexit: "The British people did not vote to become poorer".
— Tom Newton Dunn (@tnewtondunn) October 3, 2016
From ITV’s Chris Ship
Are they clapping because Hammond's speech is finally over? Or because they liked what they heard? #CPC16
— Chris Ship (@chrisshipitv) October 3, 2016
From the BBC’s Vicki Young
Hmm @edballs charleston possibly better than Philip Hammond's jokes #CPC16
— Vicki Young (@BBCVickiYoung) October 3, 2016
Philip Hammond's speech - Verdict:
Philip Hammond’s speech - Verdict: That was probably the most boring speech delivered by a chancellor to a party conference for at least two decades. Under Gordon Brown and George Osborne, this speech was always a highly charged event, combining forceful rhetoric with surprise policy statements that would set the agenda for days, weeks or even longer. Alistair Darling was less of a showman, but for most of his time as chancellor, the UK was facing a severe economic crisis, which gave anything he had to say an edge. Ken Clarke was less given to stunts, but at least he knew how to perform. Hammond, by comparison, had less fizz than a low-energy lightbulb.
In news terms, the main point was what he had to say about abandoning deficit elimination by 2020 as a target. But if you listened to him on the Today programme this morning, he explained his thinking just as clearly, if not better, there than he did in his speech. Hammond did say that he might have to revise “fiscal policy” to help the UK cope with Brexit-related turbulance (increase spending or cut taxes), but he offered no clues as to his thinking and we are going to have to wait until the autumn statement to find out what he has in mind. The only other announcement in the speech was a guarantee that projects that receive multi-year EU funding will continue to get cash from the Treasury after the UK leaves.
The rest of it was an upbeat assessment of the UK’s economic prospects and a brave (but unsuccessful) attempt to make the productivity challenge sound interesting.
Still, one senses that Theresa May does not approve of meretricious conference grandstanding. Being a bit pedestrian was probably what helped Hammond get the job of chancellor, and there is a lot to be said for avoiding the kind of flash policy announcements that can fall apart within hours. If you take the view that dull and boring is good in policymaking, then I suppose this was a triumph.
Updated
Hammond is on his peroration.
When future generations look back on our decision in 2016…
…they will see not the end of an era…
…but the beginning of a new age...
…not a country turning inward…
…but a nation reaching out…
…decisively, confidently to grasp new opportunities.
A bigger, better, Greater Britain.
Truly, a country that works for everyone.
He says the Tories must “resolve to tackle the challenges we face at home with renewed vigour”.
Updated
Hammond is back on Brexit.
We are going to leave the European Union.
To repatriate our laws.
To assert the supremacy of our courts.
To control our borders.
But we are not going to turn our backs on the nations of Europe.
Let us resolve that as we leave their Union…
…we will remain the best of neighbours…
…the closest of trade associates…
…the strongest of security partners.
But Hammond says he is also promoting a similar initiative for the Midlands - the Midlands engine.
The Midlands Engine, with its hub here in Birmingham, powers 11.7 million lives…
…generates £220 billion of Added Value to the economy….
….produces 18 percent of UK goods exports….
….and more than a fifth of UK manufacturing output.
In this great region, there are 320,000 more people in work than there were in 2010.
But both productivity and economic growth have lagged behind the UK average.
So we have developed our Long Term Economic Plan for the Midlands.
Hammond says he remains committed to the northern powerhouse, Osborne’s initiative to revive the economy around Manchester. Hammond says:
One of the key messages of the referendum campaign was that large parts of our country feel left behind.
They see the country getting richer, but don’t feel part of that success.
A dangerous divide is opening up between those who believe they have a stake in the success of our economy and those who do not.
It is one of the central missions of this government to tackle that divide…
…to see the benefits of economic growth shared more evenly across the regions and across the generations.
A key part of this agenda is harnessing the economic power of our cities.
The northern powerhouse project takes a visionary approach…
…linking the great cities of the north into a coherent economic entity...
Updated
Hammond says he supports government intervention in the economy in some circumstances.
So today I can announce a further £220m of support to tech innovation:
£100m to extend the biomedical catalyst fund to stimulate the transformation of revolutionary science into deliverable healthcare interventions.
And a further £120m to nurture the tech transfer offices that put universities and entrepreneurs together to get the science from the lab into the factory.
(Actually, the Tories announced this in a press release on Saturday)
Updated
Hammond says he wants to “future-proof” the economy.
The fruit of British genius being harvested here in Britain as we move into a fourth industrial revolution…
…creating jobs, wealth and success…
Future-proofing the economy of post-Brexit Britain.
Hammond says he wants to see innovation benefit the economy.
And my ambition is clear: I want to see what is invented here, developed here.
I want to see what is developed here, produced here.
I want to see jobs, profits and tax receipts here in Britain.
Hammond says the UK is a world leader in new technology.
Over the last few years, unnoticed by most of us, entrepreneurs and scientists from home and abroad have been turning Britain into a hub of tech innovation.
And global businesses have followed, hungry for the inventions and innovations they are generating…
… Developing technologies that will change fundamentally the way we work and the way we live.
Driverless cars, Graphene, the internet of things, artificial intelligence, 3D printing, virtual reality, advanced robotics.
I’ll be honest with you: I had no idea until a few weeks ago just how much I don’t know!
And even less idea how much I wouldn’t be able to understand even once it had been explained to me!
But this is the future!
Updated
Hammond says he is committed to keeping the national infrastructure commission at the “very heart of our plans to renew and expand Britain’s infrastructure”.
Hammond turns to housing.
Quite simply, we’re not building enough new homes.
This is a long-term challenge.
But there are short-term measures we can take.
And the package of measures announced by Sajid Javid earlier:
- The £3bn homebuilders’ fund
- And £2bn of new investment for accelerated construction on public land…
…is a clear demonstration of this government’s determination to tackle this challenge using all the tools at our disposal.
Updated
Hammond says the skills challenge is important too. But the government has been able to make “huge progress”, he says.
How many people, ten years ago, would have believed that in every year since 2014, Maths would be the most popular A-level subject in English schools?
But it was.
What a tribute that is to Conservative education reforms.
But despite the progress, there is still a huge gap between our skills base and that of our key competitors.
It’s holding people back from achieving their full potential.
He says the government knows what to do about productivity.
The good news is that we do know how to do productivity.
Parts of London have the highest productivity in Europe.
The bad news is that the productivity gap between our capital and our second, third and fourth cities is greater than in any other major economy in the world.
Closing that gap will be key to Britain’s future outside the EU.
Updated
Hammond says improving productivity will be a priority
Hammond says the government needs to improve productivity. He acknowledges that this is a dull topic, but he asks the audience to listen to what he has to say about why it matters.
You probably know that our national productivity is lower than the US and Germany…
…perhaps you even feel somewhat resigned to that fact?
But did you know that it is lower than France…. and Italy too?
And had you made the connection about what that means in the real world?
Because it means that millions of British workers are working longer hours for lower pay than their counterparts in Europe and the US.
That has to change if we are going to build an economy that works for everyone in Britain.
If we raised our productivity by just 1% every year, within a decade we would add £250 billion to the size of our economy; £9,000 for every household in Britain.
So productivity should set political pulses racing.
He says improving productivity will be “right at the forefront of our policy agenda”.
- Hammond says improving productivity will be a government priority.
Hammond says the Tories want to grow the economy and create wealth.
We know how to do that, we Conservatives. We’ve proved it time after time. Cleaning up Labour’s mess again and again.
We will do it by making the British economy the most outward-looking, most dynamic, most competitive, high wage, high skilled, low tax economy in the world.
Hammond says Labour is 'totally unfit to govern this country'
Hammond turns to Labour.
Corbyn’s big idea is to spend an extra half-a-trillion pounds.
That’s £7,700 for every man, woman and child in the UK.
(I just hope he remembers to water that magic money tree every night before he goes to bed!)
Now, we could speculate as to how Labour would pay for such a spending splurge…
…but fortunately we don’t have to.
Because we have the answer from Labour’s last shadow chancellor, Chris Leslie.
This is what he said last week about how Labour would fund Corbyn’s plan:
“you’d have to double income tax. You’d have to double National Insurance. You’d have to double council tax. And you’d have to double VAT as well.”
So, there you have it – Labour condemned out of the mouth of one of its own as totally unfit to govern this country.
- Hammond says Labour is “totally unfit to govern this country”.
Updated
Hammond confirms he is not longer aiming for a surplus by 2020
Hammond says last year the government borrowed £1 for every £10 it spend.
Piling up debt for our children and grandchildren is unfair and unconservative, he says.
He says the government will cut the deficit.
But it will do so in a pragmatic way, he says.
- Hammond confirms he is not longer aiming for a surplus by 2020.
He says Osborne’s policies were right for the time.
But he says he will set out a new plan, for the new circumstances the UK faces, at the time of the autumn statement.
By doing so he will demonstrate the “pragmatism” that has made the Conservatives the most successful party in British political history.
Hammond hints he may cut taxes or increase spending to stabilise economy after Brexit vote
Hammond says the Bank of England cut interest rates after the Brexit vote.
But fiscal policy may have a role to play, he says.
- Hammond hints he may cut taxes or increase spending to stabilise economy after the Brexit vote.
He says if projects get EU funding before Brexit, the government will continue to fund those projects after the UK leaves.
Hammond says the markets have calmed since the referendum.
Much of the recent data has been better than expected, he says.
That points to the underlying strength of the economy, he says.
But he says there is still uncertainty.
Business hates uncertainty, he says. He says he understands that.
The government will fight for the best possible deal for British business, he goes on.
Britain after Brexit “will remain one of the best places in the world for a business to invest, to innovate and to grow.”
Hammond turns to Ed Balls.
He was not Strictly’s first choice, he says. They wanted Jeremy Corbyn - until someone told them he had two left feet.
(That is probably the worst joke anyone has tried during the entire party conference season.)
Hammond says the Tories are the true party of working people
Hammond says the UK will go into these negotiations with an economy that is fundamentally sound.
He says the tough early choices taken by George Osborne delivered credibility; credibility with the markets, ensuring low borrowing costs, and credibility with business, leading to investment.
He says Labour did not acknowledge the economic recovery at their conference last week.
- Hammond says the Tories are the true party of working people.
He says the Brexit vote was a demand for control. That message has been accepted by the Conservatives, he says.
But people did not vote to become poorer or less secure, he says.
He says successful negotiation with the EU 27 will demand experience and steely determination. No one is better placed to carry his negotiation out than Theresa May, he says.
- Hammond says the Brexit vote was a demand for control.
Hammond pays tribute to David Cameron.
He says the Brexit vote has changed politics.
But only one big party offered people a referendum. And only one party has unequivocally accepted the result, he says: the Conservative party.
Hammond says he inspected the gold reserves recently. Gordon Brown’s decision to sell off gold cost the country £7bn, he claims, because he sold when the gold price was low.
Philip Hammond's speech
Philip Hammond, the chancellor, is speaking now.
He says it is a privilege to be here as chancellor.
He hoped to be a Treasury minister earlier in his career, he says. He was shadow chief secretary to the Treasury before the 2010, and the “there is no money” note from Labour’s Liam Byrne was left for him, he says. But David Laws published it.
He says George Osborne did not leave him a note. But if he had, it would have said employment up, wages rising, the deficit down and income tax down.
Javid accuses Emily Thornberry of hypocrisy on housing
Sajid Javid, the communities secretary, launched a highly personal attack on Emily Thornberry in his speech. He criticised her for having three homes while Labour is opposed to the right to buy.
There’s a difference between [Labour] and us. They want a society which is dependent on the state, rather than a state that serves society. That is why they have always opposed right to buy. Of course, it is very easy to dismiss home ownership as a bourgeoise aspiration, especially from the comfort of your multi-million pound Islington town house.
Emily Thornberry - remember her? The champagne socialist shadow foreign secretary who cringes when she sees the English flag. She already owns at least three houses worth a total of £4m. And yet she wants to stop working people from owning the homes that want to grow up in, raise families in, want to grow old in. The hypocrisy is quite something.
As I said earlier, it is unusual to hear something smacking so much of class envy at a Tory conference. The Mirror’s Jason Beattie thinks Javid could have found a better target.
Memo to Sajid Javid @EmilyThornberry was brought up by a single mum in a council house. Best not deride her for being anti aspiration #CPC16
— Jason Beattie (@JBeattieMirror) October 3, 2016
Updated
Javid's proposals to increase house building
In his speech Sajid Javid, the communities secretary, announced three measures to boost house building. Here they are.
- More money for a £3bn home building fund. Javid said this would help fund the building of 25,000 homes this parliament. Of the £3bn, £1bn is short-term loan funding for small builders, custom builders, and innovators. The other £2bn is long-term funding for infrastructure. Some of this investment has already been announced, by £1.15bn is “new” (ie, announced for the first time), the Tories said in a briefing note.
- Measures to speed up building. “Currently traditional housebuilders take too long to build houses – so government will take direct action, using surplus public land to build faster, including by encouraging new developers with different models into housebuilding,” the Tories said. They said this “accelerated construction’ approach would cost £2bn in borrowing and lead to up to 15,000 homes being built on public sector land.
- Changes to planning rules to to create a “de facto” presumption in favour of housing on suitable brownfield land. This will “drive up density levels in high demand areas while ensuring that developments are well-designed and respect the character of the local area”, the Tories said.
Sajid Javid, the communities secretary, is speaking now. He has just attacked Emily Thornberry, the shadow foreign secretary, for owning three homes, while allegedly not backing home ownership.
I will post the full quote shortly. It’s quite unusual to hear them engage in class warfare at the Tory conference ...
Greg Clark’s speech was a routine but policy-free statement about the importance of business. But it did contain at least one intriguing fact.
We are a scientific powerhouse.
Only America has more Nobel prize-winners, and more top universities.
Look up into the night sky tonight and marvel that a quarter of all satellites launched into orbit are made not in Houston or Cape Canaveral – but in Stevenage.
He also included the near-obligatory tribute to Joe Chamberlain.
The conference proceedings have started and Greg Clark, the business secretary, is speaking now. He began by saying the public deserved credit for their role in the economic recovery.
I will post a summary when I have seen the full text.
Manufacturing output at highest level since June 2014
There is good news on the economic front too, the Press Association reports.
Output in Britain’s manufacturing sector reached its highest level for more than two years as the industry continued to bounce back from a post-Brexit vote slump.
The closely watched Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) said output hit 55.4 last month, up from 53.4 in August, and above economist expectations of 52.1.
A reading above 50 indicates growth.
The move means output hit its highest level since June 2014 in September and shows a marked improvement since it dropped to 48.3 in July, the first month after Britain voted to leave the European Union.
Andrew Mitchell suggests benefits for wealthy pensioners should be cut
On the Westminster Hour last night Andrew Mitchell, the former international development secretary and former chief whip, said the government should consider restricting the benefits that go to wealthy pensioners. That could mean means-testing benefits like free bus passes, free TV licences and the winter fuel payment from pensioners who receive them.
Mitchell told the programme:
There are two absolutely critical issues which we’ve got to address. One is social mobility and the other is the inter-generational divide … The fact [is] that older people are doing incredibly well when it comes to benefits and so forth, and younger people much less so.
Asked if benefits for wealthy pensioners should be targeted, he replied:
There’s no question that we have to look at this again and in the interests of equity between the generations this will be on the agenda before long.
On this Mitchell probably has the support of Nick Timothy, Theresa May’s highly influential co-chief of staff whose ConservativeHome columns from the last year or so have turned out to be the best guide available as to what May’s government is going to do next. But May and Timothy are constrained by the fact that the Tories promised to protect pensioner benefits at the last election.
According to the BBC, Lord Porter, the Conservative chair of the Local Government Association, said last night that the government should consider relaxing the rules that stop councils borrowing to invest in housing. This is the policy that Jeremy Corbyn was proposing at the Labour conference last week. It is something the LGA has advocated for years.
Porter told the BBC that the 25,000 extra homes being proposed by Philip Hammond in his speech today would be a “step in the right direction” but that the government needed to do more.
This is from the Estates Gazette’s Louisa Clarence.
Lord Gary Porter LGA chairman says affordable housing is a fiscal problem not planning problem -calls for better borrowing conditions #CPC16
— Louisa Clarence (@LouisaClarence) October 2, 2016
Scotland's Brexit minister criticises May's 'inflammatory' rhetoric
Scotland’s Brexit minister Mike Russell has urged Theresa May to abandon the “inflammatory” attacks in her conference speech on Scottish nationalists, and instead start meaningful talks on a pan-UK deal for leaving the EU.
Speaking on BBC Radio Scotland on Monday morning, Russell said:
Some of her language is very foolish. To describe people as divisive nationalists is bad enough; in a Northern Ireland context that can be inflammatory.
He played down that down as conference rhetoric but said the Tories appeared very arrogant. “I think a change of tone is required,” he added later.
Russell carefully avoided saying Holyrood would veto the Brexit bill, the so-called great repeal act, by refusing to give it legislative consent but said May had to honour her pledge earlier this summer to include Scotland in her Brexit strategy.
It would lead to a “very, very serious situation” if May tried to subvert the UK’s devolution settlement, he said. May had to accept that Brexit had huge implications for Scotland’s devolved responsibilities.
Russell said the Scottish government would press for greater involvement in the Brexit talks at May’s first joint ministerial council later this month, where she meets the heads of all three devolved governments. “I’m not talking the prime minister’s pronouncements to her conference as the last word on this,” he said.
David Mundell, the Scottish secretary, told Good Morning Scotland the Brexit deal was a Westminster decision: everyone knew “the Scottish parliament does not have a veto over Britain leaving the EU.” But he insisted the UK government wanted to work with Russell and first minister Nicola Sturgeon on framing that deal. “We are willing to listen to options [for Scotland] but we haven’t heard what those options are,” he said.
Lady Wheatcroft, a Conservative peer, has criticised Theresa May’s decision to declare that she will invoke article 50, starting the formal EU withdrawal process, without consulting parliament. Speaking on the Today programme the former Sunday Telegraph and Wall Street Journal Europe editor said:
It doesn’t feel very democratic to me to have one individual using the royal prerogative deciding exactly when we’re going to commit to that momentous path. This is surely something for the sovereignty of Parliament to have a say in, and not for the prime minister alone.
She also said the public should get a chance to approve the final Brexit deal, perhaps in a second referendum. But in this morning’s interview she did not go as far as she did in the summer, when she suggested the House of Lords should block Brexit legislation.
Wheatcroft’s summer interview prompted this outburst from the Open Democracy founder Anthony Barnett.
Everything that is disgustingly cosy, self-regarding, privileged, corrupt and unaccountable about the way Britain is governed is represented by the House of Lords. The idea that it should claim a right to override the hoi polloi, shows a complete failure to understand what has happened.
Barnett’s Blimey, it could be Brexit! was one of the best accounts of the EU referendum and now he is crowdfunding a follow up called What Next. The Wheatcroft quote is from the introduction that he has already published.
Hammond's morning interviews - Summary
Philip Hammond, the chancellor, has given a series of interviews this morning.
Often at party conference it is the job of the chancellor, or shadow chancellor, to deliver the bad news. This morning Hammond duly obliged.
Here are the key points.
- Hammond said the economy would go through a period of “turbulence” during the Brexit negotiation process.
We must expect some turbulence as we go through this negotiating process. There will be a period of a couple of years or perhaps even longer when businesses are uncertain about the final state of our relationship with the European Union ...
We have to expect a period when confidence will go up and down - perhaps on a bit of a rollercoaster - until we get to a final agreement, where businesses and consumers can understand what the future relationship between Britain and the European Union will be.
- He said that, although the economy was doing well at the moment, there was a danger that business uncertainty would lead to investment drying up. Asked to rate the state of the economy on a scale of one to 10, and when it was put to him that the UK might deserve a five or a six, he replied:
Oh, I think we are better than that. From the data we’ve seen from the first half of this year, this economy is running at eight out of 10, with high employment, strong growth, robust fundamentals.
But he said that there was some evidence that trouble was looming.
Anecdotally we hear of businesses postponing investment decisions. And if we don’t do something, if we don’t intervene to counteract that effect, in time that would have an impact on jobs and growth. And it is to make sure that we can intervene to deal with that situation that we need to push back the target for fiscal balance.
- He said he was abandoning the plan to get the budget in surplus by 2019-20 because he had to be ready to spend more to support the economy during this period of uncertainty.
As we go into a period when inevitably there will be more uncertainty in the British economy, we need to have the space to be able to support the economy through that period. But we need to do that within a context that makes very clear that we will balance that budget, we will get back to a position of fiscal sustainability.
There was a case for “targeted, high-value investment in our economic infrastructure”, he said. He said investment in infrastructure would create jobs in the short term, and make Britain more efficient in the long term.
- He rejected claims that he was now adopting Labour’s approach. He claimed Jeremy Corbyn’s economic policies were “ludicrous”.
We’ve heard some very irresponsible proposals from Labour and we heard last week some ludicrous suggestions about borrowing vast amounts of money. And we know from experience that the Labour party, if it were ever entrusted with government, would not be spending this money on the most productive forms of investment.
When it was put to him that, although he might not be adopting Corbyn’s policies, he was echoing what Ed Balls was saying before the general election, he also rejected that claim - although less convincingly. Told he sounded like Balls, he replied:
I hope I’m sounding like a Conservative pragmatist faced with a challenge of uncertainty in the economy, wanting to ensure that we support the British economy through that period.
- He said the government was still accepted the assumption that Brexit would lower growth. Asked about an Institute for Fiscal Studies prediction that it would lower growth by 4%, he replied:
That is, despite the good economic data that we have had, still the central prediction of economic forecasters, that overall leaving the European Union will have a negative effect on economic growth ... That’s the central prediction of economic forecasters and we have to take what they say seriously.
But the prediction did not involve a “one-off hit” to the economy, he said. It was a forecast for what might happen over 15 years.
Pound falls as City faces up to hard Brexit
Brexit worries have pushed the pound back towards the 31-year lows plumbed in the aftermath of June’s referendum.
Sterling has lost over half a cent in early trading, dropping to £1.2902 against the US dollar. That’s the lowest level in seven weeks.
That follows yesterday’s surprise news that article 50 will be triggered within six months.
Traders are also reacting to Theresa May’s declaration that she wants a clean break from the European Union, with full control of immigration and an end to the jurisdiction of the European Court of Justice.
This is being interpreted as leading to a ‘hard Brexit’, in which Britain would also leave the singe market - meaning significant disruption for the City.
There is more here, on my business live blog.
Q: The remainers trust you. But they worry you are not close to Theresa May. She did not name you as a Brexit minister yesterday.
Hammond says he is not a Brexit minister.
But he and May are looking for the best deal for UK workers.
And that’s it. I will post a summary shortly.
Q: What will happen about immigration? Sajid Javid said last week the UK would still need to let in European builders.
Hammond says the key point is to get control.
Once the UK takes back control, it will be for us to decide if we bring people in.
Q: But working-class families won’t want to hear that we have control, but we are letting in exactly the same number of migrants as before. Will you stop people coming?
Hammond says there is a large cohort of EU citizens in the UK. He hopes they will stay.
This is about future migration, he says.
It will be for the British parliament and government to decide immigration levels.
Q: You could borrow a great deal now, if you sort out borrowing in the long term.
Hammond says the data suggests the economy is in robust health. He says he wants to create a framework that allows the government to respond if growth starts to slow down.
Q: Growth might slow because Theresa May said, in terms yesterday, the UK will not be in the single market.
Hammond says the UK will be trying to get the greatest degree of access to the single market.
Q: Zimbabwe has access to the single market. So does Afghanistan.
Hammond says he is talking about access without tariffs and quotas. European countries make more stuff that gets exported to the UK than we make for them. So there is an interest in getting a reciprocal deal.
Q: The IFS says leaving the EU could cut GDP by 4%.
Hammond says forecasts do predict that leaving the EU will hit economic growth.
But that is spread over 15 years.
Q: And you are saying that is true.
Hammond says that is the central forecast of forecasters.
But the government can try to “head off” those outcomes.
Q: Has Brexit created a problem for business?
Hammond says businesses are uncertain. When they are uncertain, they delay decisions. If the government did not intervene, that uncertainty would affect growth and jobs.
Q: So will you borrow to invest?
Hammond says there is a distinction in his mind between borrowing to invest, and day-to-day spending. He thinks there is a case for targeted, high-value investment in infrastructure. That creates jobs in the short term, and helps the economy in the long term.
Q: You sound like Ed Balls.
Hammond says he hopes he sounds like a Conservative pragmatist.
Q: But what Labour said turns out to be right.
No, says Hammond. He says Labour was proposing some “ludicrous” policies at its conference last week, like excessive borrowing.
Philip Hammond's Today interview
Nick Robinson is interviewing Philip Hammond.
Q: National debt is £1.6tr. This is not the time to say austerity is over.
Hammond says public spending has to be controlled. But circumstances have changed. The Brexit vote, and the slowing of the world economy, have created a difference. Inevitably there will be further slowing of the economy. So there has to be space to support the economy.
Q: Will you set a new target?
Hammond says the 2020 target has gone. But that does not mean he will not operate within a framework. Debt is still eye-watering. The markets need to know there is a plan.
Almost all papers are splashing on Theresa May’s speech yesterday.
The conservative, pro-Brexit papers are very enthusiastic.
Monday's Daily Mail:
— Nick Sutton (@suttonnick) October 2, 2016
This lady's not for turning!#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/oPAP2azJoN
Monday's Telegraph front page:
— Nick Sutton (@suttonnick) October 2, 2016
'We must look beyond Europe'#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/YhmLmp810o
Monday's Sun front page:
— Nick Sutton (@suttonnick) October 2, 2016
March to freedom#tomorrowspaperstoday #bbcpapers pic.twitter.com/MlkrNQD3cg
Monday's Daily Express:
— Nick Sutton (@suttonnick) October 2, 2016
EU exit will be triggered by March#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/4bYzhIZWqN
Other papers are more measured.
Monday's Guardian front page:
— Nick Sutton (@suttonnick) October 2, 2016
May focuses on 'hard Brexit'#tomorrowspaperstoday #bbcpapers pic.twitter.com/PvtnRAUwzF
Monday's FT front page:
— Nick Sutton (@suttonnick) October 2, 2016
May sets Brexit course with hint of clean break from single market#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/pt5QnQLfA7
Monday's Times front page:
— Nick Sutton (@suttonnick) October 2, 2016
EU leaders reject May over 'hard' Brexit talks#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/emWC69rivv
Monday's i front page:
— Nick Sutton (@suttonnick) October 2, 2016
May's hard Brexit plan#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/z98TUBwwVi
Even the Morning Star has splashed on the Tory conference.
Monday's Morning Star:
— Nick Sutton (@suttonnick) October 2, 2016
We won't be silenced#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/D0oazVOfeI
And the prize for the most ingenious headline goes to the Metro - although it’s a shame it is wrong.
(May said the UK would trigger article 50 by the end of March. March is not April. No doubt someone in the Metro office tried to explain that to the editor, but why let the truth get in the way of a good headline.)
Monday's Metro front page -
— Nick Sutton (@suttonnick) October 2, 2016
May: it's April#tomorrowspaperstoday #bbcpapers #cpc16 pic.twitter.com/qg0ZXPwpM6
Monday tends to be Treasury day at both the Labour and the Tory conference and today’s sessions in Birmingham are both headlined “an economy that works for everyone”. The key speaker is Philip Hammond, the chancellor, who is up just before lunchtime.
Hammond will say that he is abandoning George Osborne’s plan to get the budget back into surplus by 2020. He will say:
The fiscal policies that George Osborne set out were the right ones for that time. But when times change, we must change with them. So we will no longer target a surplus at the end of this parliament.
Actually, Osborne himself abandoned his own budget surplus timetable after the EU referendum vote, because Brexit is likely to lead to lower growth, so in this respect Hammond is just re-announcing an Osborne policy. But so far, in the advance coverage of what Hammond will be saying, that nuance seems to have been missed.
Here is our preview story of Hammond’s speech.
And here is an excerpt.
The chancellor is to tell the Conservative party conference that he remains set on achieving a balanced budget, while reiterating that this would happen in a “pragmatic” way without the need for a surplus this parliament.
The scale of the deficit “remains unsustainable”, Philip Hammond is to say on Monday according to extracts of his speech released in advance.
The Conservatives were elected “on a promise to restore fiscal discipline”, Hammond is to note, adding: “And that is exactly what we are going to do. But we will do it in a pragmatic way that reflects the new circumstances we face.”
Hammond will be on the Today programme shortly. I will be covering his interview live.
Here is the agenda for the day.
10.30am: Economy session, with speeches from Greg Clark, the business secretary, Sajid Javid, the communities secretary, Chris Grayling, the transport secretary and Philip Hammond, the chancellor.
2.30pm: Economy session, with speeches from Karen Bradley, the culture secretary, Andrea Leadsom, the environment secretary, and Liam Fox, the international trade secretary
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